DA wants forensic investigation into Eskom’s power station overspend
Eskom overspent by R52.2bn on Medupi and Kusile power stations, with a subsidiary overspending by 936.1% on one contract
The DA has asked for a forensic investigation into Eskom’s overspending by R52.2bn on the Medupi and Kusile power stations.
DA deputy finance spokesperson Alf Lees said in a statement on Wednesday that a report submitted to Parliament’s standing committee of appropriations by the Office of the Central Procurement Officer revealed that Eskom would overspend by R52.2bn or 48.5% on the two power stations. The overspend on Kusile was R26.2bn (a 45.3% overspend) and R26bn (52.2%) on Medupi.
"I have since written to the Office of the Chief Procurement Officer to determine whether there are any active forensic investigations into these contracts and, if not, to request that they be instituted as a matter of urgency," Lees said.
According to the report submitted to the committee, Eskom Rotek Industries, a subsidiary of Eskom, is handling a contract on which there has been a 936.1% overspend. "This is not only suspicious but shows a lack of transparency in the procurement process within Eskom," Lees said.
The biggest overspend went to Mitsubishi Hitachi Power with an overspend of R10.2bn. Lees said these contracts have been mired in controversy ever since the involvement of the investment arm of the ANC, Chancellor House, was exposed.
In 2015, the DA laid charges against Chancellor House after it emerged that Hitachi Ltd, the company which won a R38.5bn tender to provide Eskom with boilers for the Medupi and Kusile power stations in 2007, admitted to having made improper payments to Chancellor House, to the value of $6m, in the process leading up to the tender being awarded.
Other extreme overspends revealed to the committee were:
• Alstom S&E Africa R9.7bn (49.8%) overspend — turbines, instrumentation
• MPS Joint Venture R6.6bn (224.2%) overspend — civils
• Kusile Civil Works R4.8bn (106%) overspend — civils
• Esorfranki Civils R1.9bn (460.6%) overspend — underground civils
• Basil Read R1.8bn (123.5%) overspend — construction
• Aveng Africa R1.3bn (258.3%) overspend — plant installation
Said Lees, "The conclusion that must be arrived at is that there was extreme mismanagement of these contracts, fraud and corruption or a combination of these."